Neurocrine Biosciences Inc (NBIX) 2009 Q2 法說會逐字稿

Good morning and welcome to Neurocrine Biosciences second-quarter earnings call.

At this time, all participants are in listen-only mode. Following the presentation, there will be a question-and-answer session. (Operator Instructions). Please note this call is being recorded.

I would now like to turn the call over to President and CEO of Neurocrine Biosciences, Mr. Kevin Gorman.

Thank you very much and welcome, everyone, this morning. I am joined this morning by Chris O'Brien, our Chief Medical Officer, and Tim Coughlin, our CFO, and Jane Sorenson, investor relations.

This morning, what we're going to do is Tim is going to run you through the financials for the second quarter and year-to-date, and then Chris will take you through an update of all of our clinical programs.

Hopefully, you've had a chance to see our press release yesterday morning where we gave the six-month update to the 702 Lilac Petal Study. So Chris will be spending some time on that and then going over the entire Elagolix program.

Before we get started, I would like to ask Jane Sorenson to read our Safe Harbor statement, please.

Good morning. I want to remind you of Neurocrine's Safe Harbor cautions. Certain statements made in the course of this conference call that state that Company's or management's intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements which are subject to risks and uncertainties. Information concerning factors that could cause actual results to differ materially from those contained in or implied by the forward-looking statements is contained in the Company's SEC filings, including but not limited to the Company's annual report on Form 10-K and quarterly reports on Form 10-Q. Copies of these filings may be obtained by visiting the Investor Relations page on the Company's website at www.neurocrine.com. Any forward-looking statements are made only as of today's date, and we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances.

Thank you, Jane. Okay, Tim, could you give us an update?

Sure. Thanks, Kevin. Good morning to all from here in San Diego.

Following up on our clinical news from yesterday morning, we released good financial results yesterday afternoon.

The short story is that we are on plan from a financial standpoint, in spite of the fact that we incurred a $3 million charge during the second quarter for our severance program. The Company is implementing cost-containment efforts throughout the organization. Through these efforts, we were able to offset a good portion of this $3 million severance charge and remain on plan.

I should also mention that the overwhelming majority of the costs for the recent severance has actually been paid to the impacted employees prior to the quarter end. That is reflected in our cash and investment balance at June 30.

Our loss for the quarter was $0.39 per share based on 39 million shares outstanding. For the same period last year, we had a loss of $0.55 per share. Our loss for the quarter was essentially what we had budgeted, in spite of the severance charge.

Our year-to-date loss is $0.90 per share, compared to $1.10 per share last year, slightly higher than budget due to the first-quarter expense related to the (inaudible) accrual on the re-letting of the front building, and they $1.4 million charge related to the downgrade on the auction-rate securities we hold with Citi.

Our research and development and general and administrative expenses were in line with our expectations and down from the previous year. Overall, we will see these expenses decrease in the last two quarters of the year due to lower personnel costs and lower professional service costs. However, our external development expenses will rise slightly during the second half of 2009 due to the commencement of our carcinogenicity studies for Elagolix and the start of the VMAT2 Phase I trial.

As I explained during the first-quarter call, there are a couple of accounting nuances that one has to consider when comparing 2009 and 2008 numbers. They all relate to how we were required to account for the rent expense in the building in 2009 versus 2008.

The first was related to rent expense. In 2008, rent expense was treated as interest expense in accordance with Generally Accepted Accounting Principles. In 2009, this same rent expense is now characterized as a component of operating expenses.

Secondly, during 2009, we began to recognize our deferred gain on the sale of the building that occurred in December of 2007. This accounts for approximately $700,000 of non-cash other income each quarter.

Finally, we recorded rent on a straight-line basis over the term of the lease. This adds approximately $300,000 of non-cash expense each quarter to the income statement.

From a cash and investment perspective, we are managing our cash flow and expenses closely. We ended the quarter with $74 million in cash and investments, slightly ahead of plan. This was due to the recovery in the value of our two auction-rate securities with Citibank. Recall that, during the first quarter, these two investments were downgraded by Moody's, and we took a $1.4 million income statement charge in the first quarter.

During the second quarter, global credit markets improved and credit spreads narrowed, and these investments regained most of their value lost due to the Moody's downgrade. This recovery was recorded as other comprehensive income in the balance sheet.

As an aside, we have all of our auction-rate securities evaluated by an independent evaluation firm for financial reporting purposes.

Looking forward to the second half of 2009, we reaffirm our guidance of managing the Company to a burn from operations of approximately $50 million to $55 million for 2009. We will file our 10-Q today with the SEC.

With that, I will turn it back over to Kevin for the balance of the call.

Thanks very much, Tim. As you can see, we continue to be in a very good financial condition. Right now, I would like to turn it over to Chris O'Brien to take us through the clinical programs.

Thanks, Kevin, and good morning to you on the call. I am happy to talk about the progress we are making in our various clinical programs, so I will touch on Elagolix, Urocortin 2, VMAT2, and Dainippon.

Let me start out with the news for Elagolix. As you are aware from our press release yesterday, we have completed the six-month portion of the Lilac Petal Study. We were happy to lock the database for this trial just two weeks ago and give you the preliminary look at the numbers in the press release.

You recall the Lilac Petal Study was our fourth of five Phase II trials. This is the one we reported the primary endpoint, which was a comparison of Elagolix to placebo at the week 12 time point, and we talked about that in March of this year. Obviously, the trial completed for the remainder of this six-month exposure, but you'll recall that women who had been randomized to placebo were re-randomized in a double-blind fashion to one of two doses of Elagolix, 150 mg and 250 mg once daily.

Now, the importance of the 250 mg dose was that we had used our extensive dose response modeling based on PK/PD data from earlier trials to predict and select a dose that would help us understand what the upper end of the dose response continuum would be.

As you know, with the 150 mg dose, we had seen nice clinical efficacy and an excellent safety profile in our earlier Phase II studies, and of course through the week 12 time point of the Lilac Petal Study.

The 250 mg dose was very comparable to the 150 mg dose as it relates to AE -- adverse event profile -- and clinical benefit. But we were most interested in seeing if we could find a so-called maximum tolerated dose. We assumed that we would see that not with an adverse event or a clinical chemistry change, but rather with a subtle impact on Dexoscan, which is used to assess percent change in bone mineral density over six months. Obviously, as we've discussed before, it is the six-month interval that is informative as to these kind of subtle effects on bone mineral density.

So, the 250 mg dose was predicted, with the modeling that we have, to give us an effect that would be close to pushing change in bone mineral density such that we would see a signal that we were right at that threshold of the percent change that we had discussed with the FDA.

As you recall from our 603 study, the Petal study, we had been very successful with the 150 mg dose in that the percent change from baseline, the mean change for a spine and femur, was low in the 0.1% or 0.6% change decrease from baseline. But most importantly, the primary endpoint in the Petal study was that the lower bound was a 95% confidence interval for that mean change did not exceed minus 2.2%. So that's what -- we were mostly interested in here with the Lilac Petal Study. Obviously the second three months of the trial was not placebo-controlled. It was everybody in a blinded fashion on either 150 or 250 and to the 250 does indeed showed a slightly greater percent change in BMD, minus 1% at the femur and minus 1.6% at the spine. These are subtle changes, nowhere near the kind of magnitude effect you see with drugs like leuprolide or Depo-Provera at six months -- similar to Depo-Provera but nowhere near the 4% or greater that you see with lupron.

The lower bound of the 95% confidence interval was minus 2.59%, so just over the minus 2.2% at the spine and minus 1.6% at the femur. So you can see we've just kind of tickled the bottom of kind of the upper end of where we wanted to be with the 250 mg dose. In fact, it's exactly in keeping with the predictions that we have made with our dose response modeling -- so very, very pleased with our ability to outline now the extent of the dose response continuum, which puts us in a good place to move forward with our discussions with the FDA and justification for dose selection for our pivotal trials in 2010.

From an efficacy standpoint, the exploratory scales that we've talked about before, the daily scales for dysmenorrhea, non-menstrual pain and numeric rating scales, those performed exactly as you would expect. You may recall, at week 12, women had improved considerably compared to baseline on these three scales, and we uncovered this statistical floor effect when compared to placebo on the non-menstrual scale. Obviously what that means is the scores were so low that there was really no room for further improvement.

I am happy that clinical improvement we had seen at 12 weeks was sustained for the full 6 months of this trial. The scores at the end of the six months were very low, suggesting that women had marked reduction in their pain symptoms related to endometriosis.

The daily scale scores were in the kind of 0.5 range, suggesting that they are really at the bottom of the scale for the dysmenorrhea and non-menstrual symptoms, and in the 1.6 range I believe for the NRS scale -- the latter is 0 to 10, so it is an 11-point scale. So women were markedly improved.

Obviously, without a placebo group, I can't do a placebo comparison, so it is not really sensible to talk about P values. I mean, [post-op], you can do a P test comparing months six to baseline, and you see significant improvements on all those scales, but without a placebo group, it is not particularly meaningful to make those kind of comparisons.

However, the skills that I think are useful to talk about are the patient global impression of change in which you truly are comparing the subjects' assessment of how much they've changed compared to baseline. If you use a conservative definition of responder -- that is women who say they are either much improved or very much improved -- we see exactly what we've seen in the Petal study, mainly that about 80% of women say they are very much improved or much improved at six months compared to baseline.

Not surprisingly, we see that the responder rate is about the same for both the 150 mg dose and the 250 mg dose. This confirms what we've previously talked about, mainly that you're getting this excellent clinical benefit at the 150 mg dose with no additional benefit achieved with the greater suppression of estradiol.

To that end, the pharmacologic impact of Elagolix is in keeping with what we predicted with our modeling, namely that the maintenance of estradiol at kind of low physiologic levels is not only achieved with 150 or 250 but it is maintained across the six months of treatment and that the median estradiol values at month six are in keeping with our modeling, namely 41 pg per ml for the 150 mg dose, and a lower 21 pg for with the 250 mg dose.

You know, it's interesting. With the 150 mg dose, we have very a low percentage of women who have low estradiol levels, below 10 or 12 pg per ml. It's in the single digits, whereas with the 250 mg dose we see, depending on how you cut the data and how you look at it, between 15% and 20% of women with estradiol -- median estradiol values below 10 or 12 pg per million -- so exactly what the model predicted, exactly what I had hoped to see with the 250 mg dose. This allows us to move forward very nicely.

Now, the tolerability and safety of Elagolix in this six-month treatment was quite good. The study conduct we were very pleased with. Overall, in the six-month trial with treatment for endometriosis, you expect -- typically the literature describes about a 30%, 33% dropout rate. Some trials are a little higher, some are a little lower.

In this Elagolix trial, the discontinuation rate over the six months of treatment was 29%. That includes a mix of both placebo and 150 and 250. The overall discontinuation rate during the placebo-controlled portion was slightly higher in the placebo group than in the Elagolix group.

When we look at discontinuations due to adverse events, it was 2.9% for the 150 mg Elagolix group and 5.6% for the 250 mg Elagolix group. Those are very nice values for a program like this.

The kinds of adverse events that were reported during the clinical trial were consistent with what we've seen with all the other studies with Elagolix. As a reminder, to date, we have treated around 900 subjects with Elagolix in various trials. Over 500 women with endometriosis have been treated for up to six months' duration, so it's a substantial clinical database to date.

The most common adverse events reported in this trial and other trials that differentiate from placebo seem to be consistently nausea. That's at a low level, typically mild to moderate, rarely resulting in study discontinuation. In this trial, it tends to be in the 7% to 9% range, and the other AE that is reported more commonly than placebo is headache. In this trial, again it tends to be in the kind of 7% to 9% range, again mild to moderate, rarely resulting in discontinuation. It's actually strikingly low, considering that nearly half of women who enroll in this trial have a history of migraine or headache chronically, even prior to exposure to study drug.

The only other one that -- AE that seems to be in kind of that ballpark in the kind of 5% to 7% range and greater than placebo in this trial is arthralgia. I hadn't seen that in my other large Petal study or earlier Phase II studies, so I'm not sure if that's just unique to this trial, but obviously we will keep track of that.

We don't precipitate significant hot flashes, particularly at the 150 mg daily dose. The frequency of hot flashes comparable during the single-blind placebo lead-in period, during the placebo period and then for the 150 during the treatment phase -- they are all in the kind of 0.5 hot flashes per day as a mean value.

At week 24, the frequency was slightly higher due to a couple of outliers in the 250 mg group. We are in the process of analyzing that now as the data is still fresh. But it appears that a couple of women may have reported a slightly higher hot flash rate. That brought that up to a mean of one per day in the 250 mg group, but we will explore that further going forward.

There were no safety signals evident from review of the clinical chemistries -- liver enzymes, hematology, urinalysis, ECGs, vital signs, all comparable to placebo, so very reassuring about the safety profile of Elagolix. So, as you can tell, we are happy that the clinical operations team here, the pharm-dev team with a study drug, the regulatory group, everybody has done a great job in pulling this study off and keeping the program moving on schedule and on track.

We will submit abstracts of these study results as they become available for upcoming scientific meetings. As we delve into the database more extensively, if there are interesting findings, I will be sure to keep you up-to-date on subsequent conference calls.

Now, the Elagolix program in general continues to move forward, on track, on schedule as planned. We have the 703 study or the Tulip Petal Study. I'm happy to announce that we completed randomization for that trial in Central-Eastern Europe earlier this month, in fact just a couple weeks ago. Remember, we were awaiting for the last woman to randomize based on the onset of her menses. She had a slightly longer than we expected delay onto onset, so we had to wait a few extra days, but she did randomize and we now will plan on reporting the week 12 placebo lupron-Elagolix topline comparison information in late Q4, as previously discussed, probably just after Thanksgiving, but it depends exactly on what day the last visit is for her and just a quick turnaround of getting the soft lock on that database.

Of course subjects will continue to complete the entire six-month treatment of the Tulip Petal Study. That will have the final results of the six months in early 2010.

As you know, in that trial, we've gotten the opportunity to assess the impact of leuprolide injections. We are comparing leuprolide to placebo so that we get a rough idea of how, in this modern era with the modern data collection and current endpoints, things behave, so we can begin our discussions with the EMEA. We assume that we will have active comparator trials for European registration. We want to get an idea of both the Depo-Provera from our US Petal study and leuprolide from our Tulip Petal study to begin those discussions with the EMEA.

To that end, we are engaged with a dialogue with the regulatory authorities. As you recall from our March conference call, we had this interesting floor effect problem with the non-menstrual, the exploratory scale for daily assessment of non-menstrual symptoms. I've compiled the data which I submitted to the reproductive division at the FDA. They are reviewing that data. We are engaged in exchange of e-mail and dialogue. I will be talking with them later this summer in more detail to obtain some clarification about the best path forward for endpoints. Obviously, I will you know when we get some further detail there.

No matter the outcome of that discussion, I assume that we will have some clarity. That gives me some time to adapt accordingly such that we will submit our end of Phase II meeting request as planned after the 703 topline results, and then expect that the FDA will schedule our end of Phase II meeting in early 2010 as planned, which will allow us to begin pivotal trials in the second half of 2010 as planned, so that's moving forward nicely.

We are very pleased with the safety profile. We are very pleased with the sustained benefit over six months of treatment in multiple studies. We are very pleased to have the dose response continuum clarified -- so that's the Elagolix program.

The other note there is that our preclinical group has continued to move things forward nicely with discussions with the preclinical authorities at the FDA. We will be initiating our two-year carcinogenicity studies on schedule as planned.

So, outside of Elagolix, we obviously have other clinical programs moving forward. I am very happy to report that our clinical trial application, or CTA, to the regulatory authorities at Health Canada was just approved the day before yesterday, so that means we will move forward as planned with the first in-human study with our VMAT2 inhibitor. So the Phase I trial we will conduct in Canada -- because we can get the most rapid turnaround for this initial study.

This trial, our main interest is looking at the PK profile of this molecule. If it performs as hoped, then we get a very clean, rapid go/no go decision, and then we will move in to the IND phase so we can get rapidly to a proof-of-concept trial with US studies in 2010 -- so, that's moving along nicely.

The team did a great job. Obviously, that VMAT2 inhibitor program has come from some extensive in-house work and it allows us to go after CNS indications. In particular, we are interested in going after tardive dyskinesia because of the unmet medical need and the opportunity for an orphan drug pathway.

Our Urocortin 2 program, even though, as Tim mentioned, we have had tight rein on our spent here at Neurocrine, I have been looking for ways of keeping the clinical aspects of Urocortin 2 moving forward. As such, we have engaged three of our academic collaborators, one in New Zealand and two in Europe, to see what we can do to keep this moving forward.

I am happy that the cardiologists in Christchurch New Zealand have successfully applied for regulatory approval and funding for a clinical trial in patients with acute decompensated heart failure in New Zealand. We are working with them, have contributed from the intellectual point of view with input into trial design and preclinical documentation to support these initiatives, as well as clinical study material, study drug. So it would be very nice to finally see Urocortin 2 in these acute decompensated patients that show up in the emergency room with (inaudible) heart failure.

The two European projects are in discussion stages. I will let you know when those come to fruition.

Finally, on indiplon, after not getting any finalized notes back from the FDA, we have just moved ahead and engaged consultants to help us see if there is a viable path forward for indiplon and a way back into the FDA to do something with the drug that we believe is safe and efficacious. We are waiting for the additional feedback from some of these consultants and I will give you an update, if we find a viable path forward, in upcoming calls.

So I think that gives you an update. Elagolix moving forward well, nice study results; Urocortin 2 -- a nice opportunity to do something without a spend; VMAT2 on schedule for first study and dosing in a couple of weeks, and indiplon engaging some consultants to see if we can find that viable path forward.

With that, I will turn it back to Kevin.

Thanks, Chris. So that was a fairly detailed accounting of the six months 702 study as we closed that down.

So you know, three Phase II-bs, each six months in duration, two of them now completed and the results have been outstanding in both of them and right in line with our expectations for this drug. So now it's the final one which is the 703 study that is, as Chris said, is ongoing.

So at this point, what I'd like to do is open it up for questions.

Thank you. We will now begin our question-and-answer session. (Operator Instructions). Brian Abrahams, Oppenheimer & Co.

I noticed there were some subtle differences in the BMD changes that you observed at six months with the 150 mg dose in Lilac Petal, compared to what you saw in the Petal study. I'm just wondering. How meaningful, in your mind, are those differences, if at all? Just given this variability, how reliable in the eyes of regulators do you think their view of six-month bone mineral density studies would be?

Thanks, Brian. It is interesting. We are talking about variability. There is variability in Dexoscan and then for an individual subject, which is significant. In fact, for an a given individual subject, if you want to reassess the impact of an intervention, sometimes for these kind of subtle changes of 1% percent level or 0.5%, you don't even get a meaningful read until you go out for, say, one to two years because of the noise that surround that.

But in our case, we are talking about the variability of a mean for a group of subjects on Dexoscan. In fact, that's why, with the FDA, we've looked at the lower bound of a confidence interval being minus 2.2% as a threshold that we are interested in.

So anything within that realm, whether it is a minus 0.9 or minus 0.6, that is just noise. It is the difference most likely between the population in one trial and the population for another.

If you look at the range of change in BMD for individual subjects in our studies as well as Lupron or DMPA or others, you see that the range is actually incredibly broad. You see changes as much as minus 10% to plus 5% depending on if the woman is 42 years old or 21 years old, concomitant medications, if she's a smoker, how heavy she is, some genetics.

But the good news I think for us and one of the surprises to me is that, if a woman entered our trial with osteopenia -- keep in mind we didn't allow anybody in with osteoporosis -- but if someone came in with a T-score of minus 1.4, they fared no better or no worse than anybody else in the trial. So the effects of Elagolix were consistent regardless of the baseline BMD status of women.

So this is just noise. The mean value is what's important from a regulatory point of view going forward.

Got you. And then, just to follow up, Chris, can you give us a sense of maybe some general scenarios, such that, coming out of this meeting, this upcoming meeting with the FDA, you would feel comfortable moving straight into a Phase III versus scenarios in which you think maybe an additional bruising study might be beneficial?

So, in a general sense, if we come out of our discussions and the endpoints that the agency is truly interested in are ones that I have clinical experience with, then we can -- we don't need any additional input. We can move straight-away. In my case, I would assume I would go with an SPA just to nail it down. And then obviously we would engage our partner with that process because, as Kevin has pointed out before, we don't want to start a Phase III trial without the appropriate resources to complete the Phase III program.

If, after our discussions, we have clarity on endpoints and there are some subtle changes to wording or whatever, or if we come up with a way of handling the non-menstrual symptoms that I haven't had clinical experience with, then I might want to do a small exploratory test of that modification. I can handle that in the timeframe that I have already outlined without delay of the plan for end of Phase II and start of pivotals that I've already outlined.

I have well over 100 very good investigators' insights with a significant pressure of subjects that are interested in receiving Elagolix, such that I could test out enough that I would need to power calculations for pivotals with any kind of change that the FDA would come up with.

So I'm looking forward to that. Obviously, when we get clarity on whether we are moving more rapidly to Phase III or testing the hypothesis and keeping on track to Phase III, I will let you know.

Great. Thanks very much for a clarity.

Phil Nadeau, Cowen & Co.

I also have a few questions on Elagolix, first is on the 150 mg dose. Could you let us know what the lower bound on the 95% confidence interval was in the spine and femur there? I think that's the last piece of data that we're looking for.

Okay, let me explain that in my notes here. Okay, this 150, spine -- the lower bound was minus 1.6 at the week 24, and then the femur is minus 1.4 at week 24.

Great. Then my second question is on adverse events. You mentioned the adverse events that were different versus placebo, but it sounds like none of those really lead to discontinuation. So what were the predominant adverse events in the trial that led to discontinuation at 150 mg and 250 mg doses?

I think there were one or two. I'm sorry, I don't have those in front of me but they were -- the most common -- I think the two of them were the symptoms of endometriosis. Women had insufficient pain relief but they decided to go on and get a contraindicated intervention or a hysterectomy or surgery.

We had -- I apologize; I just didn't bring those in to have on-hand. But I can tell you what they weren't. They weren't women who were suffering from excessive suppression of estradiol, so we didn't see hot flashes or loss of libido or the things that one would see with a menopausal state induced by a GnRH agonist, for example.

And we -- gosh, I'm trying to think what else. I apologize. I just don't have those in front of me.

That's helpful nevertheless. Thanks for that. then the last question is on the two-year carcinogenicity studies. Can you remind us how many species you need to see that in?

Two species.

Is it two rodent species or do you need to do primates or anything?

No, no, no primates.

Okay, just (inaudible)

Yes, just mouse and rat.

Okay. Given that these are two-year studies and they are beginning now, is it safe to say that the earliest you could file for FDA approval of Elagolix would be sometimes towards the end of 2011? Is there any way that you could file earlier than that without the two-year (inaudible) studies being completed?

No, in fact, the carcinogenicity studies are not the rate-limiting element of the NDA submission. As I've mentioned I think in the past, the expectation for an NCE like Elagolix in a non-life-threatening condition like endometriosis is that we fully conform to ICH items that we have two large efficacy pivotal trials that are six months in duration, plus some post-treatment follow-up, and that we will probably have one-year treatment safety data from a safety trial. If these are all running concurrently and the time to then analyze the data, assemble the NDA and do the submission -- I think we've talked about 2012 as the timeline.

Great, that's very helpful. Thanks for taking my questions.

[Tommy Nuen], Piper Jaffray.

I am here for Thomas Wei. Thanks for taking our question.

Just a small follow-up on that bone mineral density question -- and you alluded to osteopenia. I wonder if you can just comment on the rates of osteopenia in this younger population and specific disease populations, how this relates from your population in the trial versus historical data.

Thanks, Tom. That's actually interesting and somewhat complicated because there is a paucity of data on this population and endometriosis in particular.

Osteopenia, as you know, is just defined as a T-score that is suggesting a subtle difference in BMD from the mean values for 30-year-old otherwise healthy women. If you just do a cross-section of women in their 20s, you see 1% is osteopenia. If you move into your 30s, it goes up, and into your 40s, there is a considerable prevalence of osteopenia.

So what we see with Elagolix at the end of six months is a small percentage -- I don't have in front of me but it's in the single digits -- somewhere in the range of I think (inaudible) 6% or 7% of women that would technically qualify for osteopenia. But that's the same as you would see in a placebo group when you look at the distribution of ages that we have in our trial -- because obviously we have some women at 40, 41 years of age and some women at the low end. The mean age is 30-31 years.

In contrast, if you look at, say, the number of women that meet the criteria for osteopenia with the NPA or Lupron, obviously that is considerably higher. So that's a good question. It's important to keep that in mind in what we see with Elagolix. Particularly, 150 is exactly what we'd expect to see in that population.

There is some data that suggests women with chronic disease, especially autoimmune or inflammatory disease, at one year, even women in their 30s have about 1% bone loss without any intervention at all. So I am seeing figures like we have with 0.5% bone loss actually puts that (inaudible) quite nicely.

(Operator Instructions). Larry Smith, DLS research.

I think you get this question every time, about whether you have any information on the disease-modifying characteristics of this product. But could you give us any insight into whether you followed women who have completed six months of therapy to be able to determine whether there is a change in lesions, whether pain is still significantly different from baseline? Also, have you seen anything -- are you able to make any kind of observation on whether bone mineral density improves after Elagolix is withdrawn? I guess finally, have you seen any kind of unusual events in these women post-treatment?

So, thanks for that question. I can answer that from our Petal Study. The 603 study, as you recall, six months of treatment, six months of no treatment, and then for a small subset, we even followed them out to week 72, so an additional six months.

For the group that we followed out for six months post-treatment, as it relates to pain, we have seen that, in fact, the pain scores, the quality-of-life scores and other measures show sustained and clinically meaningful improvement even six months after no treatment, even to the point that, for many women, they wouldn't qualify for enrollment in the study. They wouldn't meet entry criteria, they are still that much better.

Now, you asked also about lesion. We did not go back and do so-called second-look laparoscopic visualization of lesion counts and types. That was popular ten years ago, and people believed that would be a way of trying to look at disease modification.

Since then, there is ample literature that shows that is not terribly useful, because of the vagaries of lesion counting in general, and the very poor correlation between lesion count and clinical symptoms. There is absolutely no correlation between lesion characteristics such as is it hemorrhagic or scarred or (inaudible) cyst or whatever -- and clinical symptoms. So we know that, although an older drug like leuprolide had in its label that there is a reduction in lesion count, we know from our discussions with key investigators and regulatory authorities that we would not get a disease-modifying label now based on just lesion count.

Unfortunately, there are no good biomarkers for disease modification for endometriosis that are currently available and agreed upon by regulatory authorities. We would love to do that. It's obviously in my development plan that we are looking for these biomarkers and we are collecting proteomics and other kinds of data. But at the moment, that's not a regulatory path that is viable in the near term. We will obviously try and go after that for label enhancement as the science will support.

Finally, you asked about bone change in the six months of follow-up. Since we didn't see much if any bone loss in the 150 group, you can't look for really any improvement. What you see at six months with 150 mg Elagolix is basically what you see at 12 months after additional six months of no treatment.

Now, with the 250 mg group, because there is a slightly higher number, it will be very -- one would expect that you would see a return toward the baseline mean, but I don't have that data. We obviously didn't have 250 mg in the Petal Study. So I hope that answers your question.

Yes, thank you.

Okay, so we've gone a bit over now, and so we are out of time. I do appreciate everyone's participation this morning. As you can see, our guidance at the beginning of the year we continue on virtually every front. Our burn is well controlled. We remain in a very good cash position. Elagolix, our lead program, the drug continues to perform very well in the clinic. It is displaying substantial and, importantly, sustained efficacy now in two six-month trials. It is very well tolerated by the endometriosis sufferers, which is a big departure from the currently available drugs out there for endometriosis. We continue to push forward in our other programs.

So I would like to thank you all for your participation this morning, and we look forward to talking to you throughout the rest of the summer as we get more clarity from the FDA and as our programs continue to move forward. Take care.